1. What is the difference between an alternative expenditure limitation (home rule), permanent base adjustment, and a one-time override?
Home rule—Arizona Constitution, Article IX, §20(9), allows a city or town to adopt an alternative expenditure limitation (home rule) with voter approval at a regularly scheduled election for the nomination or election of its governing board members. A home rule prescribes the method the city or town will use to calculate its own expenditure limitation each year. Voters must approve a home rule prior to the first fiscal year in which it applies. Home rules apply for 4 succeeding fiscal years, after which the constitutional expenditure limitation becomes effective, unless voters adopt a new home rule.
Permanent base adjustment—Arizona Constitution, Article IX, §20(6), allows a city or town to permanently adjust its base limit with voter approval at a regularly scheduled general election or at a nonpartisan election held for the nomination or election of its governing board members. The Economic Estimates Commission will use the adjustment to calculate the constitutional expenditure limitation beginning with the fiscal year immediately following the fiscal year that voters approve the permanent base adjustment. Permanent base adjustments apply to all future years; however, voters may adopt additional adjustments.
One-time override—Arizona Constitution, Article IX, §20(2)(c), allows a city or town to exceed its expenditure limitation with voter approval at a special election held on the third Tuesday in May or at a regularly scheduled election for the nomination or election of its governing board members. A one-time override does not allow a city or town to establish an alternative expenditure limitation for 1 year. Instead, a one-time override allows a city or town to exceed its constitutional expenditure limitation by a specific amount in the fiscal year after the election. As such, the city’s or town’s resolution and ballot language should include the specific amount of excess expenditures that it is asking voters to authorize.
2. May a city or town under home rule adopt a permanent base adjustment?
Yes. A city or town under home rule may adopt a permanent base adjustment. The Economic Estimates Commission will use the adjusted base limit to calculate the city’s or town’s constitutional expenditure limitation for the year following a permanent base adjustment’s voter approval. However, the city or town is still subject to its home rule if the home rule has not expired.
3. May a city or town adopt a home rule after voters have approved a permanent base adjustment?
Yes. A city or town that has an adjusted base limit may adopt a home rule. A city or town should use the adjusted base limit to calculate the estimated constitutional expenditure limitation it presents in the publicity pamphlet. The permanent base adjustment does not otherwise affect the home rule process.
4. What guidance is available to assist in preparing a home rule, permanent base adjustment, or one-time override proposal?
We have prepared prerecorded webinars that address the requirements for all 3 proposals. The webinars titled “Alternative Expenditure Limitations (Home Rules)” and “Permanent Base Adjustments and One-time Overrides” are available for viewing on the cities and towns webinars page. A list of the statutory requirements for each proposal is available in the links below:
In addition, the Arizona League of Cities and Towns publishes home rule and permanent base adjustment guides with information and sample forms. Contact the League at infoleague@azleague.org or (602) 258-5786 to request the latest guides.
5. What are the current inflation factors that a city or town should use in a home rule proposal?
A city or town can obtain current inflation factors on the Arizona Department of Revenue’s website. The Department posts updated inflation factors semiannually in March and October. A city or town preparing a home rule packet for fiscal years 2024, 2025, 2026, and 2027 should use the inflation factors for the 4 years beginning with calendar year 2022 to calculate those years’ constitutional (State-imposed) expenditure limitations.
6. Where can a city or town obtain current population projections for use in a home rule proposal?
A city or town can obtain population projections from the Arizona Office of Employment Opportunity, State Demographer’s Office, at (602) 771-1236.
A city or town preparing a home rule packet for an election in the fall of 2022 for fiscal years 2024, 2025, 2026, and 2027 should use the population projections for the 4 years beginning with fiscal year 2022 to calculate those years’ constitutional (State-imposed) expenditure limitations. A charter city preparing a home rule packet for an election other than in the fall of even-numbered years should email our Office at asd@azauditor.gov for further guidance.
7. What happens if voters reject a home rule proposal?
If voters do not approve a home rule proposal on the ballot, the constitutional expenditure limitation applies, and the city or town may not submit a new home rule proposal to the voters for at least 2 years. However, the city or town may submit to its voters a permanent base adjustment or one-time override as described in voter-approved expenditure limitations FAQ #1.
8. What documents must a city or town submit to the Arizona Auditor General related to alternative expenditure limitations (home rules), permanent base adjustments, and one-time overrides?
A.R.S. §41-563.03(D) and (E) require that cities and towns submit a home rule or permanent base adjustment proposal, including the resolution, detailed analysis, summary analysis, and summary analysis worksheet, as applicable, to us for review at least 60 days prior to the election.
In addition, the city or town must submit a copy of the publicity pamphlet presenting the proposed home rule/permanent base adjustment to be voted upon to us before the election occurs. After the election has occurred, the city or town must submit the election results’ official canvass to us and the Economic Estimates Commission.
For one-time overrides, cities and towns do not need to submit documentation prior to the election. However, if the override passes, the city or town must submit a copy of the publicity pamphlet it sent to the voters and the election results’ official canvass to us.
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